Removal of Names of the Companies from Register – Section 248 of Companies Act, 2013 (Replacement of FTE)

Ministry of Corporate Affairs (MCA) issued a Notification dated December 26, 2016, notifying Section 248 to 252 of the Companies Act, 2013 (Chapter XVIII). This chapter deals with the Removal of Names of Companies from the Register of Companies.

Section 560 of the erstwhile Companies Act, 1956 has been replaced. Accordingly, the procedure for application with respect to the closure of a defunct company under the Fast Track Exit Scheme (FTE) has been ceased and replaced by new rules i.e. Companies (Removal of Names of the Companies from the Register of Companies) Rules, 2016 dated 27th December 2016.

Removal of name from Register of ROC:

• By Registrar on a Sue-moto basis pursuant to provisions of section 248(1) of the Companies Act, 2013.
• A company may file an application in Form STK-2 (shall be accompanied by certain prescribed documents) along with the fee of Indian Rupees Ten Thousand (INR 10,000) for removing the name of the company from the Register of Companies, after extinguishing all its liabilities.

The application shall be accompanied by the following documents:

• Copy of Board resolution authorizing the filing of this application;
• A statement of accounts showing the assets and liabilities of the Company made up to a day, not more than thirty days before the date of application, and certified by a Chartered Accountant;
• Shareholder’s approval by way of Special Resolution or consent of members having 75% paid up share capital;
• In the case of a company regulated by any other authority, approval of such authority shall also be required;
• Indemnity bond by the director(s) in Form No. STK-3;
• Affidavit in Form No. STK-4;
• Main object of the company (MOA).

Companies on whom Strike off under Section 248 is Not Applicable

1. Listed companies;
2. Companies that have been delisted due to non-compliance with listing regulations or listing agreements or any other statutory laws;
3. Vanishing companies;
4. Companies where inspection or investigation is ordered and being carried out or actions on such order are yet to be taken up or were completed but prosecutions arising out of such inspection or investigation are pending in the Court;
5. Companies where notices have been issued by the Registrar or Inspector (under Section 234 of the Companies Act, 1956 (old Act) or section 206 or section 207 of the Act)and reply thereto is pending;
6. Companies against which any prosecution for an offence is pending in any court;
7. Companies whose application for compounding is pending;
8. Companies that have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
9. Companies having charges which are pending for satisfaction; and
10. Companies register under Section 25 of the Companies Act, 1956 or section 8 of the Companies Act, 2013

A few points clicked in the mind before filing the application-

If there is pending prosecution against the company and its directors: 

If the pending prosecutions are only for non-filing of Annual Returns under section 92 and Balance Sheet under section 137 of the Act, such application may be accepted provided the applicants have already filed the compounding application.

However, steps for the final strike of the name of the company will be taken only after the disposal of the compounding application by the competent authority.

NOC from Tax Authorities: 

NOC is not required from Income Tax / Sales Tax / Central Excise / other Govt. authorities. 

Notarisation, apostilled or consularisation of indemnity bond and declaration in case of foreign nationals or non-resident Indians:

Make sure that the company does not maintain any bank account as on the date of filing the application and also does not have any assets and liabilities.

The Brief procedure followed after the filing of the application for Strike off

• Where a company has filed an application (e-form STK-2), a public notice shall be issued by ROC (Form STK-6) inviting objections to the proposed Strike off, if any.
• MCA will publish the name of the company in the official gazette and website of MCA that Company has been struck off along with the effective date.
• Company status for e-filing on MCA Portal will be “Strike-off”.

For a Brief and quick study

Difference between FTE under Section 560 of Companies Act, 1956 and under Section 448-452 of Companies Act, 2013 (Strike Off)

S. No.	Basis	FTE under Section 560	Strike Off under Section 448-452
1.	Board Resolution / Special Resolution	One could proceed with FTE by passing just a Board Resolution.	It is required to pass Special Resolution.
2.	Period for which the Company has not carried on any business	To proceed for FTE there was a condition that the Company shall not carry business for a period of preceding 1 year.	To proceed for Strike Off there is a condition that the Company shall not carry business for a period of preceding 2 financial years.
3.	Consent Letter from Members	Not required	Required, if a company is not passing Special Resolution.(75%  members in terms of paid up share capital)